Whither Canada?

Wither Canada?

We are in a relatively good place right now in comparison with other nations in the world, but putting national policy on cruise control is always a dangerous move. Federally at the moment the choice is quite clear between the 'right' and the 'left'. The Conservatives and the NDP have starkly contrasting visions of where they want to take Canada.

An interesting way to look at this is to compare nations based on the amount of government expenditure as a percentage of GDP and their tax burden as a percentage of GDP. The numbers should be somewhat similar, otherwise there will be a serious shortfall. (See Greece and Britain)

Former NDP MP Tony Martin looks back on his time in Ottawa.

I thought we had a real chance at a progressive government in the fall and winter of 2008-2009 – the coalition. For me, the lowlight was not being able to achieve that. I thought we had a chance to achieve a progressive government that would have allowed us to do a whole bunch of things, including working on the reduction of poverty. The government we have has no interest in doing anything about poverty. The lowlight was we didn’t achieve it and that the Liberals walked away from an opportunity to throw Harper out.

Do not be fooled. You cannot say they haven't indicated whither they will take us.

Some samples (this is taken from OECD stats) for 2011:

Country	Gov’t Tax Burden % of GDP	Gov’t Expenditure % of GDP
Argentina	26.1	24.7
Australia	30.8	34.3
Austria	42.9	49.0
Belgium	46.5	50.0
Brazi	l 34.4	41.0
Canada	32.2	39.7
Chile	18.6	21.1
China	18.0	20.8
Cuba	41.2	78.1
Czech Republic	36.2	42.9
Denmark	49.0	51.8
Finland	43.2	49.5
France	44.6	52.8
Germany	40.6	43.7
Greece	35.1	46.8
Hong Kong	13.0	18.6
Israel	33.5	42.9
Italy	43.1	48.8
Japan	28.3	37.1
Malaysia	15.3	26.3
Mexico	8.2	23.7
Netherlands	39.	8 45.9
New Zealand	34.5	41.1
Norway	42.1	40.2
Singapore	14.2	17.0
South Korea	26.6	30.0
Spain	33.9	41.1
Sweden	47.9	52.5
Switzerland	29.4	32.0
Taiwan	12.9	18.5
UK	38.9	47.3
US	26.9	38.9

Sources:
http://en.wikipedia.org/wiki/Government_spending#Government_spending_as_a_percentage_of_GDP

http://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE11



Right now I would estimate the OECD average to be about 42%, but I need to do a little number crunching. Two important points to consider:

1. Know your competition. For example, Singapore and Hong Kong must keep their taxes and government spending similar to compete, as must
South Korea and Japan, Australia and New Zealand, Canada and America.
It makes no sense to say we must compete with the likes of China or Taiwan, but we must remember they are breathing down our necks.

2. In public policy, one establishes models (stated or unstated). Governments can move their expenditure and tax numbers up or down over time, depending on different factors. Canada right now, at about 40% government spending is in a comfortable spot for many (but not the hard core libertarians). I can live with this. The problem is that demographic forces will cause this to grow (as it will in many other nations) unless we re-allocate spending.

Here, we must be careful. If the feds cut, but provinces make up the difference by increased spending, then we gain nothing. And the fastest growing bit of government in North America in recent years has been the one most off the radar (except the radar of the public sector unions) has been local government. How much do your local city and school board administrators make these days? How much has the staffing size and costs increased in recent years. It doesn't make headlines, but it should.

Now back to Jack. The darling of the NDP for oh so many years has been the lovely social democratic country of Sweden, where the government cares for your from cradle to grave, where daycare is free, retirement is comfortable (and health care is a mix of public and private services!). In Sweden, government spending is 52.5% of GDP. Taxes are 47.9%. And these will grow in coming years. For Canada to get here, our total taxes would have to rise by 49% and government spending by 32%. I guess the only comfort is that the NDP mainstream has quietly written off Cuba
(78% government expenditure)! Maybe the NDP equivocates and claims that Sweden isn't their only model. The other Scandinavian countries are similar in government spending: Denmark 51.8%, Netherlands 45.9, Finland 49.5%. Norway is the exception, but their numbers are distorted by their immense North Sea oil revenues.

Some things to consider in coming years. Do you want more government in your life? Do you want more taxes? This is what Jack Layton said in response to the recent federal cabinet appointments. His priorities are:

Making life more affordable for ordinary Canadians
More health care
Better Retirement security
Family supporting jobs (?!)

It is nice to say, but it must be squared with the reality of the situation. Look at the stats. Compare countries. Remember demographics.







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